Europe’s poisonous debt dynamics continue to infect risk appetite, with further significant declines in stocks, commodities, high-beta currencies and bond yields. In Asia, the Hang Seng dropped another 4% overnight, a loss of more than 25% in the last two months. Brent crude is down another 2.7%, now not that far away from USD 100 a barrel, whilst copper has fallen another 5%, a loss of close to 30% since early August. The South Korean won fell another 1.6% against the dollar, the Russian ruble has fallen 1.3% and the Indonesian rupiah is down 1%.

It isn’t only the downgrade by S&P, but also the things that happened beforehand and afterwards, that weigh on the loonie:

The significant slowdown in the US didn’t skip Canada. The huge economic ties between these neighbors mean that Canada is dependent on the US, for good and for bad, and this is reflected in a small gain in jobs. But at least for now, the loonie prefers to see the full half of the glass.

Canada’s economy squeezed down in February, temporarily weakening the Canadian dollar. This goes hand in hand with the squeeze slowdown in the US.

It’s very hard to make predictions for a full year, because so much can happen, but there are some trends that can continue or fade away. Let’s start:

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

The Canadian dollar expects another rather calm week, but with one key event to rock it – GDP. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD, now on higher ground.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:

USD/CAD chart with support and resistance lines marked. Click to enlarge:

USD/CAD graph with support and resistance lines on it. Click to enlarge: